1. A Eurcpean government decaded to issue a cansol (a band with never-ending inturest pryment and no matturity date). The bond will pay exo in fnterest exch yuar (at the end of the year), but it will never rxuin the principal. The current discount rate for the government bands is 5.4%. What should this cansal bond sell for the maiket? What if the discoust should increase in 6.35? Assed on your answers, what is the relinticeshlip between discoume rate and beed pitere? (3 points) 2. You've hoen houx shopping and anen't sure how big a mostgage han you can afford. You flgure you can handle monihly morkgage paymins of $1,058 and you can get a is year lain at 3.12%, Hirw big of a matgrige can you afford? (4 potnts) 3. Find the present value of the following cash flows assuming interest rate is 6K6 ( 4 points) annual rate for each tank) (3.5 points) 6. You make a special bank depesit of $50,000, Whir is the valse of your deposat 5 youa from now if (4 points) a) 4.896 compocasied anmully for 5 year: b) 4.8% compcinded cuarterty for 5 years c) 4.8n cumpounded daily for 5 yeses. 7. Find the future values of the folkowing ordinary annuities (4 poines): a. FV of $300 paid every qaarter for 4 years at a nceninal fate of 6% compounded quarterly b. FV of $300 paid every month for 5 yesis at a nominal rate of 6 the compounded manthly